APCMA seeks government's help

All Pakistan Cement Manufacturers Association (APCMA) has appealed to the government to come to rescue of the ailing cement industry which has suffered net accumulated losses of Rs 1.4 billion during the first 09 months of the current fiscal.
The cement industry suffered losses mainly due to rapid increase in input prices like coal, furnace oil, electricity, paper bags, interest rate, diesel, transportation etc. It would appear from the published results that prevailing market prices ranging between Rs 375 to Rs 385 per bag are inadequate to meet the increased cost of production resulting in cement industry suffering huge losses, said a spokesman of the Association here Thursday.
During the first nine months of the current fiscal year, 11 cement units suffered loss before taxation aggregating to Rs 4.856 billion while only three cement units, of which two are located near Karachi in close proximity to the sea port, earned profit of Rs 3.564 billion. At the end of last fiscal, industry debts to financial institutions amounted to over Rs 132 billion and the industry suffered losses of over Rs 10 billion.
The spokesman said that this lopsided performance of the sector is mainly due to stagnant domestic demand and steep decline of 12.52 percent in exports. The units located in northern part of the country had lost export viability due to higher transportation cost from their factories to the seaports of the country, he added.
Revealing the statistics, domestic cement despatches of 19.945 million ton during the July-May period of 2010-2011 were 7.06 percent less than the corresponding period of 2009-10. He said that the domestic cement despatches in north declined by 11.65 percent mainly due to floods, as well as, recession in the domestic markets. The domestic cement despatches in south increased by 20.46 percent on the back of buoyant demand for cement.
He said that exports to India declined by 19.81 percent to 523,902 tons while export through sea to other destinations declined by a massive 30.95 percent to 3.596 million tons. The spokesman said that an increase of 16.96 percent in exports to Afghanistan to 4.256 million tons restricted overall export decline to 12.52 percent.
He said that industry had a huge installed production capacity of 41.235 million tons and its capacity utilisation during first 11 months of this fiscal was only 75.35 percent leaving the industry with 9.319 million ton of surplus capacity. He urged the planners to expedite efforts to persuade India to allow cement exports by trucks through Wagha border that would help the industry to utilise it huge surplus capacity.
Industry experts fear a total collapse of the sector if immediate remedial steps are not taken. They said that the decline in domestic sales of cement is a direct reflection of subdued economic activities. However, they said as the global economy shows signs of recovery, the decline of 12.52 percent in cement exports should be a matter of grave concern for the economic managers of the country and reiterated the need to reinstate the freight subsidy which was withdrawn at the last budget.